September 21, 2020 | 00h00
MANILA, Philippines – Loans to micro, small and medium enterprises (MSMEs) that are accounted for in line with banks’ reserve requirements surpassed the 100 billion pesos level at the end of August as the Bangko Sentral ng Pilipinas (BSP) continued to expand regulatory relief measures amid the coronavirus pandemic.
BSP Governor Benjamin Diokno said the average daily balance of bank loans to MSMEs climbed 971 percent to 106 billion pesos at the end of August, from 9.9 billion pesos at the end of April, as the BSP extended relief measures for the banking sector.
“It’s a big relief for small businesses. BSP is happy to see that their banks are up to the task, ”said Diokno.
Due to the impact of the pandemic, Diokno said PASB temporarily changed surveillance rules to encourage lending to sectors severely affected by the health crisis.
On the one hand, the head of the BSP said that the monetary authorities now allow banks to account for loans to MSMEs and large companies as part of their compliance with the level of deposits they are required to keep with the bank. central.
The temporary measure, which allows banks to use additional loans to MSMEs and large companies severely affected by the pandemic as an alternative to complying with the RRR, has been extended until the end of 2022.
The extension gives banks and near banks more time to consider the risks of providing loans to MSMEs and large businesses severely affected by the pandemic.
The Monetary Council reduced the reserve requirement ratio of universal and commercial banks by 200 basis points to 12% from 14% on March 30 and that of savings banks, as well as rural and cooperative banks by 100 basis points to 3 percent versus 4 percent and two percent versus three percent, respectively, effective July 31.
More than 200 billion pesos have been released for additional loans due to the decision to lower the reserve requirement ratio as part of a commitment to reduce the level to single digits by 2023.
Diokno also said the BSP has lowered the credit risk weight of loans to MSMEs that have current status to 50 percent from 75 percent.
Likewise, he said MSME loans guaranteed by the Philippine Guarantee Corp, the Agricultural Guarantee Fund Pool and the Agricultural Credit Policy Council were assigned a zero percent risk weight.